World Bank had also agreed to fund the
laying of power transmission lines and setting up of grid stations for import of
electricity from Tajikistan to Pakistan

By LAMIKA ZUBERI
May 15 - May 21, 2006

The first ever energy conference of
Energy Ministers of Tajikistan, Kyrgystan, Afghanistan and Pakistan held in
Islamabad on May 8-9 concluded on a highly positive note. The four countries
agreed to form a working group for materializing transmission of 1000MW
electricity from Tajikistan to Pakistan through Kabul on urgent basis to be
increased later to over 4000MW.

The 2-day central Asia and South Asia
electricity trade conference, which concluded on Tuesday, was closely monitored
by US state Department, USAID and United States Energy Association (USEA). The
conference was also attended by delegates from Asian Development Bank, World
Bank, Islamic Development Bank representative of some companies in the private
sector.

Federal Minister Liaqa Ali Jatoi in a
press briefing after the conference on the import of electricity from central
Asia to Pakistan via Afghanistan said that substantial progress has been made on
the project as all the stakeholders have agreed to transmit the electricity via
Kabul to Pakistan. The minister said Pakistan has decided to get 4000 MW
electricity from Tajikistan and Kyrgyzstan. He said that the countries have
agreed to form a working group to move the process forward adding that the next
meeting would be held in Dushanbe some time in October 2006. The minister said
that International Financial Institutions (IFIs) nominated the World Bank as
their focal institution on their behalf.

When asked as to what would be the
mechanism to ensure the electricity of the transmission line trough war ravaged
Afghanistan, the minister said; "When there is a will there will be a
way". When stressed by the questioner if Pakistan has been given any
guarantee by Afghanistan on the security of transmission line, he said that
Pakistan and Afghanistan have joined together in a fight against terrorism and
both will handle this issue amicably. When asked as to what sort of regulatory
mechanism will be in place to ensure the smooth and quality supply of
electricity and tariff issues, he said the meeting deliberated the legal issues
and these issues will be resolved.

However, the Afghan Minister told that
the transit fee will not be a hurdle in materializing the project, as his
government considers this project of great importance for Afghan people in the
wake of energy needs in the country. To a question about the security of
transmission line he said that all the countries will jointly handle this issue.

The draft on the conclusions of the two
day meeting says that the conference deliberated upon the demand and supply
situation, infrastructure needed for transmission of electricity from Central
Asia to South Asia, commercial agreements, elements of pricing of electricity,
financing structures, possible risks and risk mitigation.

Regional energy experts were taking
paramount importance to the first meeting of the energy ministers of these
countries to materialize the import of electricity from Tajikistan and
Kyrgyzstan to Pakistan via Afghanistan particularly after the US assistant
secretary of state for South and Central Asian affairs announced on April 27 his
desire to spearhead the project of transmitting the electricity from Central
Asian states to Pakistan and India.

It is pertinent to mention here that
negotiation were also under way on importing electricity from Tajikistan since
long and the World Bank had also agreed to fund the laying of power transmission
lines and setting up of grid stations for import of electricity from Tajikistan
to Pakistan.

However, the Bank had earlier linked
its funding for the project with the transmitting of electricity through Kabul,
arguing it would benefit the war ravaged Afghanistan a lot. Now with the US
desire to spearhead this project, the scenario of the talks have changed the
pace of parleys manifold and this projects seems to be materialized very soon.

The official sources said that
electricity will be imported through a common grid station form Tajikistan and
Kyrgyzstan and Pakistan will purchase about 4000MW electricity. Under the plan,
electricity will be imported to Pakistan via Afghanistan through two routes Wah
Khan and Kabul but World Bank wants Pakistan import electricity through Kabul to
Peshawar.

The National Engineering Services of
Pakistan (NESPAK) is already engaged in conducting a comprehensive study on t he
proposed project. To a question, the official said that Kyrgyzstan's power
industry is through to be capable of fully meeting the country's domestic
electricity needs while providing surplus for export.

Of the 20-power generating units in
Kyrgyzstan, 18 are hydropower. It is believed that only about 15 percent of the
mountainous country's potential hydroelectric resources are presently being
tapped. Kyrgystan has two major power plants, a 1.2 giga-watt hydro plant at
Toktogul, and a 0.7 giga-watt thermal plant at Frunze, with plans for a major
6.8 giga watt hydropower station to be built by 2010. The official went on to
say that 96% of Tajikistan's electricity generation is hydroelectric, and the
hydroelectric potential is enough to meet all of Tajikistan's energy needs and
to export electricity to her neighbours.

The United States has publically
supported the energy accord under which Pakistan will buy 4000 MW of electricity
from Tajikistan and Kyrgyzstan using Kabul route about 700MW transmission lines
costing about 600-700 million US dollars officials of the USAID and US Embassy
in Islamabad, while talking to newsmen informally said the US State Department
had already allocated funds and staff to promote electricity sales from the
central Asian states to Pakistan and Afghanistan because the project would
generate jobs and investment opportunities for people and companies and promote
peace and stability in the region.

"This kind of project (is a) good
way for helping us achieve policy goals, to help Pakistan achieve its energy
goals. I think it is a win-in situation for everyone involved," said
Chjristan De AnAngelis, deputy economic counselor of the US Embassy in
Islamabad.

He said the project "first very
well with the US foreign policy, which is to help build regional integration
particularly between South and Central Asia".

International financial institutions,
including the World Bank, Asian Development Bank, Islamic Development Bank,
Japan Bank for International Cooperation, International Finance Corporation and
USAID also expressed their "Strong desire to support" the project
either through direct financing or guarantees and other risk management
instruments, including insurance coverage.

The participants of the two day central
Asia South Asia (CASA) electricity trade constituted a working group comprising
the four member states and the IFIs to institution-alise progress on political,
legal, technical and financial aspects of the 765 kilometer transmission line
from Central Asian States to Pakistan via Afghanistan. The inclusion of US
energy firm, AES Corporation, and Russian giant Rao-UES in the working group and
future technical meetings was opposed by Pakistan and future technical meetings
was opposed by Pakistan and Afghanistan on the ground that the project should be
carried out in a transparent manner and on international competitive basis edge
over other competing investors.

The project will provide much needed
relief to Pakistan to meet its energy crises. Although the sale price has not
been disclosed or finally worked out as get but it is commonly believed that it
would cost much less than what is being paid to IPPs in Pakistan producing
electricity on a prohibitive cost of furnace oil.